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Here’s my situation. Have a sum to pay on an interest-only mortgage, which is also offset. We’re paying it back over 8 years at too much per month. Our rate’s a bit higher than average, as usually happens with an offset apparently. Our equity’s high, over 60% of the house value.

Since taking the mortgage out, my OH’s retired and drawing her pension. I’m still employed FT but our combined income would be tight for a loan from our current lender, should they check it. In a year, we’d have paid off a bit more of the loan and it would be more likely to fit their criteria. My goal is to re-mortgage at a lower rate, saving us £hundreds per month. We’ve money sitting in the offset account but would like to keep that separate for as long as possible to cope with roof falling in or similar.

Our options might be
1) asking to remortgage with current lender over same time period at lower interest rate as a repayment mortgage. Would they check our income has changed?
2) going with a cheaper rate with a new lender, using a credit check, but possibly with high fees. Very limited range of choices as our loan is many multiples of our income (and would pension count as income)
3) getting an IFA to check our options and find us a lender.

So any suggestions please which of these would be the most hassle-free and speediest route to a cheaper rate of loan?

Amending the term would result in a review of your circumstances. That's the rule these days. Likewise so would switching to a repayment basis. Reducing the balance significantly would aid your cause though. Would result in sacrificing some savings. Though these could be replenished with a reduced monthly outgoing on the mortgage.

If the new mortgage extends into retirement for both of you. Then you are going to need evidence of your forecast pension income.

No harm in running your circumstances past a mortgage broker. Then you would at least know the full range of options available to you.

“A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”

Interesting, but with our bank we have to talk to someone online and we’d be worried they’d try to uncover our change of income.

We’re no longer eligible for the offset took out with them, but would be within limits for a repayment, especially if OH’s pension counts.

Would they agree to us switching to a lifetime tracker and paying them thousands less in interest when they’ve already got us on their books paying a higher rate? And could they call in our loan as our circumstances have changed?

Interesting, but with FD we have to talk to someone online and we’d be worried they’d try to uncover our change of income.

We’re no longer eligible for the offset took out with them, but would be within limits for a repayment, especially if OH’s pension counts.

Would they agree to us switching to a lifetime tracker and paying them thousands less in interest when they’ve already got us on their books paying a higher rate? And could they call in our loan as our circumstances have changed?

Amending the term would result in a review of your circumstances. That's the rule these days. Likewise so would switching to a repayment basis. Reducing the balance significantly would aid your cause though. Would result in sacrificing some savings. Though these could be replenished with a reduced monthly outgoing on the mortgage.

If the new mortgage extends into retirement for both of you. Then you are going to need evidence of your forecast pension income.

No harm in running your circumstances past a mortgage broker. Then you would at least know the full range of options available to you.

That’s a bit worrying. We’ve been paying the mortgage on a repayment basis for a few years now, although technically it’s interest-only, transferring money from our bank and offset savings account at a rate which will pay t all off by the end of the full term.

One advantage of switching to a new lender would be we could keep the savings outside the mortgage, where we could access it in an emergency. We are aware that offset savings probably count against us should we need benefits but we’re not concerned about that at the moment.

Would they agree to us switching to a lifetime tracker and paying them thousands less in interest when they’ve already got us on their books paying a higher rate? And could they call in our loan as our circumstances have changed?

Only reason we’re hesitating about approaching our current lender is whether they’d close the associated bank account that comes with the offset mortgage (or so OH worries, as we’ve now less income than we needed to initially open the account.).

I don’t see how that could happen, as loads of peoples’ incomes must fluctuate through their working life with sickness, maternity leave, gaps in employment, etc. Can’t see the bank making trouble for us even if they don’t offer us a better deal. Or can they?

Once a mortgage is granted. Then you'd have do something bordering on foolish or encounter financial meltdown for a lender to call the debt in. Providing you adhere to the contractual terms you'll be ok.

You'd more than likely lose the offset account if you switch product. The lender isn't going to force you to use the money in your account to reduce your mortgage balance. I'd suggest that you simply use whatever is required in order for FD to offer you a repayment mortgage. Might even be zero. It's in FD interests to assist you. As interest only mortgages are where problems lie ahead in the future. Providing you meet affordability criteria you'll be fine. You can only ask.

“A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”

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